Bill Ackman Finally Closes on Howard Hughes Investment

The “will they, won’t they” negotiations between Bill Ackman’s Pershing Square Capital Management and Howard Hughes Holdings finally reached a resolution, charting the developer on a novel path.

Pershing Square agreed to invest $900 million in the company known for master planned communities, Bloomberg reported. Ackman’s firm will acquire 9 million newly issued shares of Howard Hughes for $100 apiece, a 48 percent premium on the stock’s closing price ahead of the weekend.

Pershing Square’s increased bet on the real estate firm includes an expansion of its interests, pushing Howard Hughes into buying majority stakes in both private and public companies.

“We believe that HHH is a superb platform to build a faster-growing, high-returning holding company that will acquire control of companies that meet Pershing Square’s criteria for business quality and durable growth,” Ackman said in a statement.

Ackman’s ownership in Howard Hughes will increase to almost 47 percent, up roughly 10 percentage points. He’ll also become executive chair of the Howard Hughes board, while Pershing Square chief investment officer Ryan Israeli will assume the same title at Howard Hughes.

Howard Hughes will pay Pershing Square a quarterly base fee of $3.75 million and a quarterly management fee equal to .375 percent of the increase in Howard Hughes’ equity market capitalization compared to a reference market capitalization.

Ackman’s quest to take the Houston-based developer private included bumps in recent months. Howard Hughes last month extended a standstill agreement between the sides for the second time in a matter of weeks.

An initial deal was deemed “unacceptable in its current form” by a Howard Hughes committee in early March.

Ackman’s history with Howard Hughes is lengthy: he spun off the firm from General Growth Properties in 2010. He was chair of GGP from then until last year, when he retired from the role.

— Holden Walter-Warner